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Bangladesh VAT rates simplification

Plans for simple single VAT rate lose out

Bangladesh is to back track on original plans for a single VAT rate simplification, and instead reduce from six rates to four. The new rates will be: 15% standard; 10%, 7.5% and 5% reduced rates.

Only the 15% VAT input invoices may be creditable against taxpayers own output VAT.  This would mean the level of tax incidence my reach over 37%.  Many products under the existing 5% rate will become more expensive. There is a VAT registration threshold of Tk 50 lakh.

To help drive compliance, Electronic Fiscal Devices (cash registers with automated invoice reporting) will be introduced.

  • 15% Standard rate
  • 10% reduced: rented retail; advertising
  • 7.5% reduced: machinery; paper
  • 4.5% reduced: professional services
  • 2.4% pharmaceuticals
  • 2% reduced: medical
  • 1.5% reduced: land
  • 0% nil-rated

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